Cambridge Papers

Towards a biblical mind

Cambridge Papers (1992-present) is a non-profit making quarterly publication that aims to make clear the relevance of biblical teaching to a range of contemporary issues, and equips Christians to respond to the ideas which are shaping our society.

'Birds have nests': Biblical reflections on the housing crisis

‘... I hope it might help reclaim the very purpose of housing – as the basis for community, and a foundation for human flourishing.’ Justin Welby, Archbishop of Canterbury[1]

‘Our Father refreshes us on the journey with some pleasant inns, but will not encourage us to mistake them for home. C. S. Lewis’[2]

Summary

UK housing prices have risen faster than wages since the mid-1990s, leading to a reduced ability of young people to live in secure homes, and a housing affordability crisis. This paper argues the dominant supply and demand model misdiagnoses the causes of the crisis, and evades difficult questions. Biblical categories prompt a searching critique and can offer insights economics alone cannot provide. By emphasising the concepts of ‘stewardship’ and ‘home’, there are opportunities for Christians to make a significant contribution in addressing the housing crisis.

Introduction

The 2018 version of the board game Monopoly came with a twist. Monopoly for Millennials carries the tagline: ‘Forget real estate. You can’t afford it anyway.’ Rather than purchasing properties and collecting rent, players move around the board gaining ‘experience points’ by visiting spaces such as ‘artisanal coffee bar’ or ‘parents’ basement’. While the game’s tongue-in-cheek tone is often missed, the central question remains: have the rules of today’s ‘housing game’ changed so drastically for the present generation of young adults that most of them are effectively locked out of owning their own homes?

That same year, in the UK, the Prime Minister Theresa May declared: ‘Solving the housing crisis is the biggest domestic policy challenge of our generation.’[3] She made an emotional appeal, highlighting the ‘broken housing market’ and the aim of allowing ‘ordinary working people’ to realise the ‘dream of home ownership’. A government white paper, published the year before, painted a bleak picture.[4] Since 1998, the ratio of median house price to median annual earnings has more than doubled.[5] In the 1990s, a low-to-middle income couple saving 5 per cent of their wages annually would have enough for an average deposit in three years, but by 2017, the same couple would need 24 years. The white paper offered a simplistic diagnosis for these problems: ‘the cause is very simple: for too long, we haven’t built enough homes.’[6]

This paper will examine some of the causes of the housing affordability crisis, and consider biblical themes which can inform appropriate responses. The issue of homelessness, while a significant and important part of the broader ‘housing crisis’, is not the focus of this paper. When this paper refers to the ‘housing crisis’, it has in view the ‘housing affordability crisis’ outlined here.

Causes of the housing crisis

The widening gap between wage levels and house-price levels is the most immediate cause of the housing crisis. The factors that have contributed to the sustained rise in house prices are considered below under the following headings: reduced costs of mortgage finance; increased demand; and the broader macroeconomic context.

Mortgages: cheaper and more accessible

House prices are affected not only by the underlying fundamentals of supply and demand, but also by the availability of finance. Bank of England research has brought this into sharp relief. Looking at the long-term decrease in real interest rates in the UK, their report concluded that ‘nearly all of the rise in average house prices relative to incomes can be seen as a result of a sustained, dramatic, and consistently unexpected, decline in real interest rates.’[7] Lower interest rates have increased the amount of debt a borrower can take on at the same level of repayments, and facilitated an increase in the amount which buyers can offer. This major change in finance availability is the sine qua non of the housing crisis.

Increased demand

However, just because a buyer can borrow more money does not mean prices will rise. Low interest rates are not enough; there must also be rising or at least stable general demand for housing. For example, despite extraordinarily low, and even negative, interest rates, over an even longer period, Japan has not experienced the same inflation of house prices, since their declining population has reduced demand for housing. In the UK, increased housing demand has arisen partly as a consequence of population growth. Since 1998, this has been driven primarily by net migration, supplemented by natural growth (more births than deaths).[8] However, as people generally live with others in ‘households’, demand for housing can be driven by a decline in household size. Interestingly, as the table below shows, in the last 50 years, there has been a significant increase in the number of houses relative to the population of the UK.[9]

Two important factors which contribute to declining average household size are increased life expectancy (resulting in more old people living in two- or one-person households), and an increase in divorces and separations of cohabiting couples.[10] Smaller households seem to be broadly associated with higher national wealth worldwide.[11] In Sweden over half of the adult population (52 per cent) live alone as single-person households (the equivalent UK figure is around 30 per cent and rising).[12] These trends might be seen as a housing problem in their own right, and also significantly increase demand for housing units.

Other contextual factors

Alongside these drivers of high aggregate demand are a miscellany of aggravating factors: people buying second or holiday properties; the influx of capital from overseas buyers, reflecting a global marketplace for housing; the perceived attractions of property as a store of wealth and investment diversifier; the high costs and declining security of the private rental sector (PRS); and the dwindling availability of stable social housing.

The housing crisis: additional considerations

Regional variation in house prices and land value uplift

This general overview masks the fact that house prices vary widely across the UK. Affordability in England and Wales in 2018, as measured by the ratio of median house price to median annual earnings, varies from 4.91 in the North East, to 12.82 in London.[13] A feature of the land market is that ‘landowners are much more likely than owners of other types of capital to benefit from ... “an economic rent” – a financial return that they did not earn.’[14] For example, when agricultural land is afforded planning permission for residential use in or near Cambridge its value can rise from £10,000 per acre to £1 million. More broadly, land value is driven by proximity to the productivity of others. A considered response to the housing crisis should take account of regional variation in house prices, planning priorities when designing new settlements, and how to allocate land value uplift.

Private renting: expensive and less secure

Though rents in the PRS have not increased at the same pace as house prices, this does not mean life has been getting easier for renters. Over the last three generations, rent as a proportion of income has been increasing.[15] The majority of two-income couples in the PRS now spend around half of their income on rent.[16] Unlike house purchase, rent is not generally paid for using finance, so rents are more sensitive to undersupply in certain areas (aggravated by various factors including online rental platforms such as Airbnb). In England, 19 per cent of households are in the PRS, and 17 per cent in the UK social housing sector.[17]

While reliance on the PRS has increased in the last two decades (doubling since 2002), renting has lost many of its benefits. The Housing Act 1988 legislated for ‘assured shorthold tenancies’ of 6–24 months’ duration, reducing the stability and security of tenancy agreements. Additionally, due to historically low interest rates since 2008, rent is now generally more expensive than a mortgage for first-time buyers, even once the maintenance costs and other charges are taken into account.[18]

Biblical wisdom for the housing crisis

Before we can explore how a biblical perspective can inform our response to the housing crisis, we need to unpack what is at stake. The concept of a ‘house’ can represent access to various overlapping, but distinguishable, ‘goods’: shelter, security and privacy; a store of financial wealth (and sometimes, a source of wealth accumulation); a base that enables work; a setting for family life; proximity to family and friends; and even ‘roots’ (a long-term connection to place, family, neighbourhood and community, creating a sense of belonging).[19] Since decisions regarding housing involve prioritisation among these ‘goods’, it is vital to recognise that a house represents far more than just a physical structure. The biblical themes of ‘home’, ‘household’ and ‘land’ can expand our understanding of the purposes of housing.

The desire for ‘home’

The biblical narrative affirms the human desire for home, our ‘homing instinct’, and emphasises the importance of the concept of ‘place’ as an intrinsic part of human identity and purpose. At the very beginning of the biblical story, God places human beings in a garden, which is to become their home: a secure place, for relationship with God and each other, which sustains their lives while requiring their care and attention. However, after the Fall, human beings are exiled from their home – which ruptures relationships with God, each other, and the rest of creation.[20]

God promises Abraham a new home(land) for his descendants, so that people can once again dwell with God, but Abraham has to first leave his current home behind.[21] Thus the tension between ‘place’ and ‘pilgrimage’ begins.

For the nation of Israel, the promised land is pictured as a home for the nation.[22] The people are offered restored relationship with God, and the land grants shelter, security, economic opportunity and promotes family relationships and long-term roots in community. But Israel breaks their covenant with God, and as a result they are exiled from their homeland. Jeremiah instructed the exiles to ‘settle down’ in Babylon while they remained there.[23] Yet throughout their exile, the prophetic refrain is for a ‘home’, a place where ‘everyone will sit under their own vine and under their own fig tree, and no one will make them afraid.’[24]

These themes of ‘place’ and ‘pilgrimage’ continue into the New Testament. On the one hand, Christians are described as exiles or pilgrims in the world.[25] Jesus’ teaching made it clear that Christians must be fully committed to seeking the Kingdom of God, and that in some cases this may require leaving their houses.[26] Jesus reassured his disciples that he was preparing a ‘home’ for them with his Father.[27] The fulfilment of history is the re-establishment of a place which an untold number will call ‘home’, a jubilant homecoming to the garden restored and renewed as a garden city.[28]

On the other hand, ‘place’ continues to be important. Jesus’ mission was to inaugurate the kingdom of God on earth and, through the Holy Spirit, God dwells with his people on earth.[29] To advance the kingdom, Jesus instructed some of those he healed to return to their homes, to be a witness for him.[30] Believers were encouraged to practise hospitality, making their ‘houses’ like ‘home’, and the early church relied on people opening up their homes for church meetings and to host itinerant preachers.[31]

Scripture, therefore, seems to legitimise our deep desire for home, ‘that old ache’ in C. S. Lewis’s words.[32] Far from discarding the desire for ‘home’, Jesus and the New Testament writers seem to enlarge its scope. However, this larger role for ‘home’ relativises the role of ‘households’ and ‘housing’: our houses will only be ‘pleasant inns along the way’ home.[33]

In summary, a working definition of ‘home’ from a Christian perspective might be: ‘a secure dwelling, in which one can live with or near loved ones, in a thriving local and broader community, and in relationship with God.’

A ‘house(hold)’: relational, not material

Many biblical texts refer to the concept of ‘households’ rather than just material ‘houses’. This offers a perspective on housing following the Bible’s emphasis on relationships.[34] ‘Households’ begin in the creation narrative, where the pattern of ‘leaving and cleaving’ establishes a created norm for humans to form new households.[35] This pattern is explicitly affirmed by Jesus.[36] The household is a key organising concept in biblical law, referring to a multi-generational family (Hebrew, bayit).[37] One of Jesus’ last deeds was to make sure his own mother was looked after in John’s household.[38] Caring for members of one’s own family/household is commended in Paul’s writings.[39] Thus the biblical texts place a high priority on the household as a relational unit.

Biblical law made specific provisions to ensure that extended families could remain in close geographical and therefore relational proximity over time. The land was originally allocated to the Israelites in tribal and clan blocks, meaning that extended families were co-located in the same villages and regions. The jubilee legislation ensured that every fifty years, all land that had been sold returned to its ancestral owners. In this way extended families were periodically reunited, and related households were again co-located. The resulting relational proximity emphasised the importance of relationships not only within but also between households. The biblical social paradigm created a complex interdependence between households, in contrast to today’s Western ‘norm’ of high mobility and independence. In this light, the current breakdown of ‘households’ is striking.

The land: intergenerational stewardship

Land is a particularly rich biblical concept. It is recurrently ‘inherited’, starting in the garden of Eden, where God gives human beings dominion over the garden (and world) as tenant-stewards. The Israelites were also tenant-stewards of the promised land.[40] The centrality of land and its inheritance is not abolished in the New Testament, but rather is taken to a higher plane: ‘the meek shall inherit the land’.[41] A recurring and related theme throughout Scripture is that, though property ‘rights’ are given to humans, they must be exercised responsibly and for good purposes, otherwise they can be withdrawn. This ‘stewardship’ status differs from today’s focus on ‘ownership’.

In the socioeconomic context of the jubilee legislation, the land presented the opportunity for all adult Israelites to run a business (a farm), build a house, and steward their own household.[42] Agricultural land and property could not be permanently bought or sold; so the opportunity to grow into mature responsibility through stewardship of land was granted to each new generation, and Israelites would never be permanently alienated from their inheritance. Unlike inheritance laws today, which often perpetuate inequality, the biblical jubilee guaranteed a long-term measure of equality between citizens. And as a corollary, it guarded against the formation of a permanent landless underclass. In this way too, Israelites were connected in intergenerational relationship to previous and future generations, through their home(land).

Debt versus freedom

This paper explores the biblical theme of home, but in the absence of inheriting a house, or building their own on family land, most people cannot buy a house without going into significant debt. The biblical authors treat debt with great caution – it too easily becomes an oppressive arrangement which curtails people’s freedom.[43] As Proverbs puts it, ‘The borrower is the slave of the lender’.[44] Biblical law instituted the periodic cancellation of debts every seven years to free people from the burden of debt,[45] although this is not workable in the context of mortgage debt. However, the increase in house prices has meant that people buying a house today are having to take on ever heavier burdens of debt. Meanwhile debt-fuelled increases in house prices, which place younger generations under greater pressure, have enriched older generations and thereby increased inequality.

How should we then house?

Taken together, the biblical themes of home, household and land all strongly support the conclusion that enabling and encouraging people to live in and take responsibility for their own homes is an important part of a biblical vision for a flourishing society. In a culture which sometimes sees house ownership, and house-price increases, as a route to gain without effort, these biblical themes invite a new emphasis on encouraging and supporting ‘home-making’.

Christians have been involved in shaping the housing landscape in the past; in the nineteenth century Christian social reformers were particularly active in housing issues.[46] Some businesses founded by Christians became well known for their innovative approach to housing workers, such as the ‘model villages’ of Cadbury and Lever Brothers. Christian philanthropists contributed to the introduction of social housing, and their influence is still visible today in the estates of the Peabody and Guinness Trusts. Archibald Corbett pioneered home ownership through innovative development schemes in east London suburbs, creating ‘healthy living’ estates.[47] Christians today have a significant legacy to draw upon in addressing the housing crisis. In this paper, applications are suggested at three levels: for policymakers, organisations, and households/individuals.

Good stewards

Reformation of the financial sector

At a public policy level, the housing crisis has been facilitated by cheap mortgage debt. The current model also places most of the risk on buyers/borrowers (for example, disproportionately exposing them to the risk of negative equity through house-price falls). One option here is to consider new financial products which share risk more evenly between banks and borrowers, such as ‘shared responsibility mortgages’[48] or the debt-free ‘RISER’ concept based on shared equity.[49] These can help protect both families and the broader economy.

In addition, with many people now reliant on low interest rates continuing into the future, the central bank has a significant amount of control over people’s lives – and the Bible is sceptical about excessive centralised power. An option to consider is a statutory duty for the central bank to target house-price stability. If over an extended period of time, house-price increases were kept slightly below average wage increases, the ratio of average house prices to median wages would return to more normal levels, historically speaking, without leading to the substantial financial and political dislocation which a significant reduction in house prices would cause. These are complex and wide-ranging policy areas which cannot adequately be discussed here, but the impact of the financial sector on the housing crisis does need to be grasped and addressed.[50]

A ‘stewardship economy’

From a comparative policy perspective, economies which are more successful at managing housing effectively can be described as taking a stewardship approach. Generally, Germany has had more manageable land price increases, and government intervenes in the land market to capture land value uplift – making returns through property speculation difficult.[51] Germany’s PRS is very different to the UK’s; 40 per cent of households rent, and tenants enjoy long-term contracts and protections – they ‘rent like stewards’. Singapore, on the other hand, has one of the highest house ‘ownership’ rates among high-income economies, and utilises 99-year leaseholds rather than freeholds. While prices do rise, the benefit is spread more evenly among citizens, as ownership restrictions preclude the buying of additional properties, particularly for investment. Both countries are considered to have strong market economies, yet they reshape ‘ownership’ towards ‘stewardship’.

Renters becoming stewards

The current housing model – one in which renters effectively pay the mortgage for private landlords – must also be addressed. In the context of rising price-levels, property accumulation through buying to let can increase wealth inequality, sometimes allowing older generations to capture even more housing wealth. Changes to discourage buy-to-let mortgages should be considered. Reform of the rental market to improve security for tenants would allow renters to live more like stewards.

Developing stewardship

At the organisational level, more shared-equity arrangements can be provided through housing associations and building societies (with or without government assistance) to make house purchase more accessible.[52] Opportunities to pursue lease-to-buy arrangements for housing, allowing direct purchase through instalments, could be made more widely available. Such arrangements are relationally positive since they create partnerships and share risk more evenly between parties.[53] Innovative housing development models can help communities to steward housing. One is the Community Land Trust, which is designed to ‘act as a long-term steward of housing, ensuring that it remains genuinely affordable’.[54]

At a household level, there is an opportunity for intergenerational co-operation. Many first-time buyers can only afford a deposit if the ‘Bank of Mum and Dad’ can help. However, there is scope to develop a culture in which more sources of non-bank finance become available. Shared equity arrangements, involving multiple purchasers, may be possible within an extended family. Zero-interest loans, especially within families, churches and local communities, may also be a positive option, particularly when utilised to allow multi-generation families and extended families to co-locate.

Connected households

Relational settlements

In terms of planning policy, the current paradigm usually prioritises economic growth and access to jobs. This tends to encourage labour mobility, which contributes to the breakdown of extended family relationships, relational dislocation, and loneliness. Instead, relationships should be considered a key organising priority in planning.[55] This would place more emphasis on co-location of extended family household units, intergenerational housing designed for social benefit,[56] and relational concepts – including the longstanding concept of ‘streets’.[57] Such changes could be framed using the commonly understood ‘social capital’ metric. This would build upon current movements to promote ‘placemaking’, by prioritising relationships in families and communities.[58] Singapore has a more relational housing model, providing government help to young families and those seeking to locate near kin. This could be a radical but worthwhile policy change in the UK.

Emphasising households

Household and family breakdown has contributed to increased demand for housing. Household issues go to the root of who we are as a society, and can be difficult to address. However, churches have an opportunity through teaching and practice to address relational breakdown issues, which could help reduce the need for extra housing units. Among the factors contributing to smaller and more numerous households is higher individual mobility, which can be contrasted with a biblical pattern which emphasises the importance of place and ‘rootedness’ for facilitating family and community relationships. For these reasons, households and individuals can consider choosing to live near other family members.[59]

Conclusion: responding to the ‘home crisis’

Housing is not just about physical houses: it is about homes. The Christian vision for ‘home’ has much to offer. It reassesses our goals for ‘housing’, and even for our ‘households’. It legitimises the human desire for a secure and stable home. Most importantly, it emphasises the primacy of relationships in our housing decisions. Meanwhile, Christians can point to the true ‘home’, which ‘houses’ and even ‘households’ cannot provide, and for which the longing remains humanity’s deepest ‘ache’.[60]]

Acknowledgements

The author wishes to thank the following people for their input on earlier drafts of this paper: Andrew Phillips, Christopher Townsend, Chris Watkin and Tim Young. Any shortcomings remain the author’s.

About the author

David Corbett is a millennial from Sydney, Australia who holds degrees in History and Finance from The University of Sydney. He has worked with think tanks including the Legatum Institute in London, the PM Glynn Institute in Sydney, and on a previous Cambridge Paper. He is currently a student-at-law and training for admission to practise as a solicitor.

[41] In Matt. 5:5, the Greek gē can mean ‘earth’ or ‘land’. For example, Ps. 37:11, on which the beatitude is closely based, is generally translated as a matter of the meek inheriting the ‘land’ but, in the Greek Septuagint, the same word gē is used.

[42] For more on applying jubilee legislation to a modern context, see Michael Schluter and Roy Clements. ‘Jubilee Institutional Norms: A Middle Way between Creation Ethics and Kingdom Ethics as the Basis for Christian Political Action’, Evangelical Quarterly 62, 1990, pp.37–62.

[49] Explained in ‘The debt-free RISER: a new method of house purchase’, lecture given by Matthew Gray at Jubilee Centre’s Forgive us our Debts conference on 22 September 2012; available at jubilee-centre.org/the-debt-free-riser-a-new-method-of-house-purchase/.

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